Author Question: Demand-pull inflation is associated with: a. decreasing total spending (demand). b. increasing ... (Read 55 times)

xroflmao · **on:** Jun 30, 2018

Demand-pull inflation is associated with:
a. decreasing total spending (demand).
b. increasing total spending (demand).
c. decreasing costs of production (supply).
d. increasing costs of production (supply).

Question 2

Describe appropriate discretionary fiscal policy according to Keynesian economics to smooth out the business cycle.

cici · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

b

Answer to Question 2

The government should increase its spending and/or reduce taxes (run a deficit), or increase government spending and taxes by the same amount to combat a recession. The government should do just the opposite to combat inflation during an economic expansion.